Budgeting is something that many of us don't like to consider as we think it will tie us down. But if you really stop and think about it, budgeting is simply a means of looking at your income and expenditure and deciding on what is most important to you. Once you identify what you want to achieve, a budget is a tool to help you get there.

You should include yearly expenses such as car registration and insurance in your budget. You can divide these totals by 52 for the amount to budget for each week (or divide by 26 for the amount to budget each fortnight or by 12 if your budget is calculated on a monthly basis).

Subtract regular payments for lifestyle bills and expenses:

Entertainment;

Clothing;

Personal grooming;

Home appliances

If you are not sure as to how much you spend; either make an estimate and review it after 3 months; or consider tracking your spending for a month.

Allocate additional funds to cover

Loan repayments;

Additional superannuation contributions

The amount of money that is left can be used to buy things that you want or to save. ^

Online budget calculator

To help you plan your budget, you can utilise our budget calculator which takes into consideration all of your general expenses and gives you an idea as to how much you could save.

Saving

Saving may appear to be difficult and disciplined, but think of the feeling of being able to afford to buy something you have wanted for a long time. Here are some tips to help you on your way. ^

Set yourself a savings target

Aim to save 10% of your gross annual income. This breaks down to 5% for short-term goals and 5% for long-term goals.

Tip - the 10% rule >>

If you've never been a successful saver before, start off slowly. Leave committing to medium or long-term goals for a while until you're confident a saving strategy is within your reach.

Set yourself one short-term goal - perhaps 3 months away - that requires only a small amount of cash;

Then set aside 10% of your income each week in a separate savings account;

At the end of 3 months, withdraw the cash to pay for your small goal - perhaps a weekend away or a new piece of clothing and if there is any money left over make that the first instalment in your next savings goal. ^

Develop a safety buffer

The key to successful money management is to put funds aside during the good times and to minimise financial stress during bad times. Remember to allow for unexpected debts and emergencies eg illness in the family, loss or breakage of possessions, career interruptions etc.

Tip - how much is enough >>

Singles and couples should consider developing an emergency fund equal to 2 months take-home pay in case of retrenchment or emergencies.

Those with young families should aim to build up an emergency fund equal to 3 months take-home pay. ^

Quick budget reminders

Don't make your budget so tight that it's impossible to keep;

A budget is not set in stone. It is there to help, not hinder you. A sign of a successful budget is one that is flexible during tough times and able to reward you when your prospects are brighter;

If you blow your budget one month, try to make up for lost finance in areas that are more flexible e.g entertainment or eating out;

Revisit your budget every 3 months to see if there are any areas you can tighten up to improve your financial
flow. ^